Following the Budget last week, now is a good time to take a step back and look at the economic situation. In the aftermath of Labour’s debt crisis the Coalition is making progress in balancing Britain’s books- the deficit is now down by a third. The Government is investing in our country’s future, so the sacrifices being made now as peoples incomes are squeezed, will enable a brighter future for our children and grandchildren.
However, the progress towards a balanced budget and sustainable growth isn’t being achieved as fast as the Government had hoped. Labour are wrong to say that by saving money in our public services and welfare we are reducing domestic demand and stalling economic growth- since May 2010 domestic demand has actually risen 1.2% more than forecast.
Unfortunately the persistent problems in the Eurozone, the destination of 40% of our exports is the main reason for lack of growth in our economy. This export trade to Europe has reduced by 2.5%, hitting the whole economy. However, last week for the first time in decades, exports to non EU countries accounted for a greater share of our total exports. This is following a concerted effort by companies, backed by the government. Local companies tell me they are exporting more and to new markets.
For too long fuel prices were too high, acting as a crippling financial burden on small business and families alike. The Chancellor has listened to the arguments I and colleagues have been making and has now frozen fuel duty for the third year in a row. Fuel duty is now 11% lower than it would have been under Labour saving families and small businesses an average of £7 every time they fill up.
Local business will also benefit from the scrapping of the beer duty escalator, taking 1p off the price of a pint. I have been working with some of the outstanding breweries and pubs we have in Cornwall to press for this boost to an important local industry. Cornwall’s rapidly growing creative industries, especially those involved with digital technology will have access to £31 million of extra government funding to help them grow.
Good news also for local people looking to get onto the housing ladder, take the second step or live in social housing, and for the builders who will build their homes. Businesses in the construction industry, and indeed in all other sectors, will benefit from changes to National Insurance that will enable employers to hire up to four extra staff without paying any jobs tax at all.
Most importantly for me the Budget also rights an old wrong; Labour’s 2007 scrapping of the 10p income tax band. Personal income tax allowance will be increased to £10,000 next year, saving the average taxpayer £700 per year. The 2.7 million people who were in the 10p band before Labour made them pay more will now enter the 0p band- they will be taken out of income tax altogether.